Sarnoff: Business of office buildings is booming

Real estate

Published 6:30 am, Sunday, November 12, 2006

Trammell Crow is developing this project in the Energy Corridor along I-10 in west Houston.

Trammell Crow is developing this project in the Energy Corridor along I-10 in west Houston.

Photo: TRAMMELL CROW CO.

Sarnoff: Business of office buildings is booming

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Houston's robust economy is fueling a construction boomlet of new office projects from Westchase to The Woodlands.

The Woodlands Development Co. recently broke ground on a 13-story tower near its Waterway. At just over 308,000 square feet, 24 Waterway Avenue is the company's largest building of its kind to date. Based on recent demand from office users, officials are certain the building will lease quickly.

"We think the market's ready for it,"said Alex Sutton, co-president of The Woodlands Development Co., adding that the company is studying another office tower.

Many other areas of Houston are experiencing low office vacancy rates, while businesses there are growing.

In Westway Park, near the Sam Houston Tollway and Clay Road, Dienna Nelson Augustine is planning a 144,000-square-foot multi-tenant building.

And Chevron recently leased an entire 1.3 million-square-foot building downtown. Paul Layne, executive vice president for building owner Brookfield Properties, said the deal was a "catalyst for substantial change in occupancy levels."

There's now talk of another building by Brookfield and other downtown landlords, including the developers of the Houston Pavilions, who said an office component is part of their plans to bring a mixed-use development to three blocks at the corner of Main and Dallas.

"We've received a number of inquiries of the office building as a result of the recent tightening of the market," said developer Geoffrey Jones.

In Westchase, real estate experts said it's difficult to find large blocks of space to lease.

So Granite Properties is building a 14-story, 310,000-square-foot officer tower near Richmond and the West Belt.

"Our tenant base was just busting at the seams," said Scott Martin of Granite Partners, which owns several buildings in Westchase.

Already 40 percent of the new building is pre-leased.

Petrobras America, a subsidiary of Brazil's state oil company, is taking 70,464 square feet of space in the building, relocating from another nearby Granite property. And accounting firm Malone & Bailey, another existing Granite client, leased almost 47,000 square feet in the new building. Brad Marnitz and Vince Gyorgy of NAI Houston and Ron Robertson and Scott Covington of S.E. Covington & Co. were involved in the transactions. Both companies are relocating to take on more space than they currently occupy.

Martin also noted that the building will be certified with the U.S. Green Building Council, which registers buildings that are environmentally friendly.

New construction is also under way in the Energy Corridor market along Interstate 10 in west Houston where Trammell Crow Co. and Core Real Estate are going after tenants with new buildings.

Don't blame sprawl

More than once, Houston has been granted the title "Fattest City" by Men's
Fitness magazine
, which bases its selection on things like climate, parks and the number of fast-food restaurants.

The group's research paper, "Fat City: Questioning the Relationship Between Urban Sprawl and Obesity," found no evidence that a spread-out city affects weight.

While people living in sprawling neighborhoods tend to be heavier than where development is compact, it's not because these areas cause people to gain weight. Rather, these populations are heavier because individuals more at risk for obesity tend to live in such places.

"Someone who does not like to walk is more likely to be obese and is more likely to live where one can easily get around by car," said University of Toronto economics professor Matthew Turner, one of the study's authors.

The researchers made their conclusions based on matching a satellite image of the U.S. to confidential survey data reporting the weight and address of a sample of nearly 6,000 individuals for six
years.

Because about 80 percent of the people in the sample moved during that period, researchers could check whether they gained weight when they relocated to a more sprawling community.

While Houston doesn't have an aggressive land-use policy that pushes density, Turner said policymakers who try to combat the obesity epidemic by encouraging dense urban plans are wasting tax dollars.

"The public health battle should be fought on other fronts," he said.

More high-end townhomes

After selling 25 townhomes priced into the $400,000s in a gated community on Space Center Boulevard, the Houston company has started a second phase with 27 more units. The project, Armandwilde, has a Mediterranean style that was influenced by its neighbor, the historic West mansion recently purchased by retired basketball star Hakeem Olajuwon.

The new townhomes will range in size from 2,200 square feet to 3,200 square feet and be priced into the $400,000s.

The developer has a knack for creating homes that hearken back to other times. In addition to Armandwilde, the company is also building brownstone-inspired properties Kingwood and Sugar Land.